Generally, after the stock market closes, the company will make a capital summary of the day's capital changes in the stock market, such as the inflow or outflow of funds going north. So what is northward funding? Are stocks with continuous capital inflows from the north good? The following is analyzed by Hong Kong Securities :
What is northbound funds?
Northbound funds are commonly known as hotlines, also known as smart funds. They refer to Hong Kong funds or international funds that enter mainland China through informal channels. It can also be said that Hong Kong buys the Shanghai stock market.
The "North" of "Northbound Funds" represents mainland China. To explain in concrete terms, "Northbound Funds" refers to the use of exchanges as the main body through mutual declarations between the Shanghai Stock Exchange or the Shenzhen Stock Exchange and the Stock Exchange (Shanghai Stock Connect or Shenzhen Stock Connect). Hong Kong funds and international funds can use local securities firms in Hong Kong to submit entrusted trade orders to local exchanges to achieve cross-border trading.
Are stocks with continuous capital inflows from the north good?
The continuous inflow of capital from the north is a good thing for the stock, and it is also good for other retail investors, because the large inflow of funds from the north can promote the increase of cash flow in the stock market and attract many retail investors in the market to follow suit and buy. To a certain extent, it will promote the rise of stock prices, so retail investors will also receive certain returns. After reaching the expected return of funds, retail investors will choose to sell stocks to ensure their own returns.
If funds from the north continue to flow out, it is negative, which is equivalent to the outflow of capital from the stock market. The reduction of funds will hinder the development of the stock market. Retail investors will become panicked and then sell their stocks in large numbers, causing the stock price to fall. , the stock price falls, which will lead to certain losses for retail investors. Investors are advised to analyze it carefully and make timely response strategies.
Funds going north can increase the liquidity of the A-share market and supplement market funds, making them more fully funded. Only when there is sufficient capital flow in the stock market will trading activity increase, stocks will fluctuate to a certain extent, and investors will have the opportunity to profit from it.
The above is the relevant knowledge about "What is northbound capital? Are stocks with continuous inflow of northbound capital good?"